Near the tip of the Horn of Africa, a port city is booming without clan warfare--and partly because there is no central government. Its prosperity throws the nation's anarchy into sharp relief.

BOSSASO, Somalia — Mohammed Awil Mohammed watches with satisfaction as four women crouch on the sandy ground outside his shop in the musty heat of the dawn here, pulling the husk from frankincense with their fingers and teeth. Each worker, her lips ringed with white powder from her labors, will clean and sort at least 35 pounds of the clumps of aromatic gum before her day ends at 11 p.m.

The effort pleases Mohammed, 25, a Bossaso entrepreneur, for he is on target to reach his weekly export quota of 220 to 440 pounds of frankincense, a fragrant resin commonly burned in ceremonial practices. This will mean up to $2,400 cash in his pocket.

Before the collapse of Somalia's national government seven years ago and the ensuing civil war that has ravaged much of the country since, almost all of Mohammed's frankincense and the profits it generated would have gone to the local authorities of this semiarid, sand-swept port city.

But things have changed.

"Life in the city is different," said Mohammed, who now exports his product, which costs about $6 a pound, to Saudi Arabia and Dubai, one of the United Arab Emirates. "I'm a private businessman now. When the government was here, we couldn't even go to the port."

Mohammed, who also manages a thriving trade shipping shark fins to Hong Kong, is just one of scores of businesspeople who are capitalizing on the peace and stability of Bossaso, the de facto capital of northeastern Somalia. Near the tip of the Horn of Africa, about 700 miles northeast of the shattered Somali capital, Mogadishu, Bossaso has become a refuge from the anarchy sweeping this nation.

While most of Somalia has become an object of international despair and even disgust because the country's seemingly unceasing ethnic warfare and unchecked violence have left it with no functioning central government and in the haphazard control of numerous armed factions, here in Bossaso there is no comparable inter-clan warfare underway.

Instead, this prospering haven is run by the Somali Salvation Democratic Front, a local political organization whose leaders say they are willing to reconcile with rival clans, including that of the late notorious Somali warlord, Gen. Mohammed Farah Aidid.

There has been little ethnic-based fighting in Bossaso; almost everyone here belongs to the Darood clan. Most disputes are settled the traditional way, by elders. Bossaso's first prison is only now going up on the outskirts of town.

"People here are coming to grips with reality and facing up to their problems more than any region in the country," said John Bierke, Somalia representative for the U.S. Agency for International Development.

If the rest of Somalia followed suit, observers say, this troubled nation could eventually return to some semblance of normality.

But realistically, the chaos and societal disintegration that characterize much of Somalia indicate that peace, order and prosperity are unlikely to return any time soon.

Fighting, for example, continues to tear apart the southern port city of Kismayu.

Mogadishu has been relatively calm after last month's fragile cease-fire agreement between the main warlords there. Still, the airport in the capital remains closed, its port has stopped functioning and the city's water and sewage system is defunct.

The United Nations is conducting emergency operations only and no longer has expatriate staff permanently based in the capital, where one of the main factional leaders is California-educated Hussein Mohammed Aidid, son of Mohammed Farah Aidid.

But the dismal conditions elsewhere have, in turn, made Bossaso's relative economic progress all that much more significant to experts and observers here.

"Commercially, it's booming," Dominik Langenbacher of the U.N. Development Program said of the city. "A few traditional trading families are making the fortune of their lives." They are taking advantage of Bossaso being one of the country's only two working ports.

Marketable Products Drive the Economy

Bossaso--whose population has swollen from 6,000 to 150,000 in the past seven years--could hardly be classified as a thriving, cosmopolitan center in a Western sense. Most residents lack the basics. Potable water, electricity and indoor plumbing are still luxuries.

What many here do have, though, is marketable merchandise--and a relatively safe place to peddle it. Besides frankincense, which local officials say brings in about $150 million a year, there is a healthy trade in lobster, the leafy stimulant khat and shark fins, which fetch up to $30 a pound. Livestock--camels, sheep and goats--make up 85% of Bossaso's exports, with 200,000 or so head going through the port each month.

Protected by 140 armed security guards supported by 110 customs officials and other staff, the port's commercial activity, U.N. officials say, amounts to about $1 million a month, though business has slowed recently due to increased trade at the Somali port of Berbera, about 300 miles west of here.